What is an Accountable Care Organization (ACO)?

The Accountable Care Organization (ACO) concept is a healthcare delivery model that increases coordination among medical practitioners. ACO payment models are often structured in such a way that there is increased focus on preventative medicine, long-term patient care, and managing health care costs.

In the ACO model, primary care physicians (PCPs), specialists, payers, and other invested parties work together as a team in order to deliver optimal care to patients. Traditionally, PCPs, specialists, payers, and other stakeholders have taken a silo-ed view in how they interact with patients – with little regard in how other parties might view or be effected by the decisions they make. The ACO model encourages these many parties to work together in order to reach singular conclusions on the best way to provide long-term patient care at the lowest possible cost.

ACOs often encourage providers to increase their focus on long-term sickness prevention rather than short-term symptom treatment. This is so because ACOs are moving away from the fee-for-service payment model where care providers are reimbursed for each service provided – resulting in a lack of thought around readmissions and reoccurring sickness. ACOs increasingly operate under a capitated payment model where a payer provides the ACO a set amount of funds to manage a patient’s care for a set period of time, and any savings from managing the patient’s care at the end of the allotted time period is partially kept by the ACO as revenue. If the ACO is not able to manage the patient’s care for the designated set of time with the funds allocated by payer, then they must operate at a loss to manage that patient’s care.